S.E.C. Real Estate Observer

Many years ago I was returning from a real estate exchange marketing session in Acapulco, Mexico. An exchangor from San Jose California told me about a policy his firm had developed concerning new listings. Their listing agreement required the seller to provide their firm with a current Preliminary Title Report (Prelim) in many states called a Commitment To Insure, at the time they listed the property. This report shows any liens of encumbrances on a property, items which are vital to know about when marketing or transferring title to the subject property. Some of these items can affect the priority of a mortgage on the property as well. In California most title companies will honor the cost of a Prelim for up to two years and credit its cost against the premium paid later for the title policy.

Harry Hustler, as he had done countless mornings before, stirred a little sugar into his first cup of Starbucks “high test” and opened his Wall Street Journal to purvey the business happenings of the day. The news remained bleak. Bernie Madoff gets 150 years in the crowbar hotel. GM can’t quite figure if it is a car company or a political operative. Iran is suppressing the masses. Unemployment continues to rise. Real estate continues to take a hit. Harry read on, getting his morning elixir of the economic mess our politicos, bankers and Wall Street friends have showered upon all of us within the last couple of years. However, in the economic strife-torn malaise of doomsday prognostications, Harry has remained comfortable in his circumstance, but unsettled by the unrest.

Last edition, I wrote about being positive, communication with your lenders and partners, brainstorming at S.E.C. meetings and with your acquaintances, figuring out what works in a recession and upgrading your skills. This edition, I want to concentrate on personal development, focus, and time management.

As we all know, it’s hard to fly like Superman not only when your cape is on fire, but when you have a portfolio filled with Debt laden properties that are ready to hit the proverbial lender graveyard. Historically, Debt has undermined many great fortunes. Among our founding fathers, Jefferson, Adams and Franklin, (and most of the other founding fathers) experienced the continual and unrelenting anxiety associated with maddening Debt.

Over the last several months, we have seen some of the most dramatic economic changes in many years. First the housing market fell apart. Then the big Wall Street firms started to drop like flies. The lenders, banks, and insurance companies all started having trouble. Now the auto manufacturers are going under. What’s next? I certainly don’t claim to know, but looking at our history might give us some direction — and some reason for optimism.

In Part I of this article, “Pricing Real Estate The Key For Results,” the term “Cap Rate” to structure an income property value was noted as well as the ability to utilize “creative formulas” to structure a property; acquisition should there be a question as to the price/value of the property. First an overview as to what is the “makeup of a Cap Rate” will be presented, and will then be followed by a sample illustration of two “creative formulas” that I personally had the ability to apply to a successful transaction [...]

In one way or another, we have encountered and/or studied something about counseling. We have then been told how important, in fact crucial, counseling is to a successful real estate practice. But alas, the most important ingredient to effective counseling is often glossed over, underrated or just plain forgotten - LISTENING. But what has THAT got to do with counseling?! [...]

I had negotiated a price of $295,000 on 4+ acres of unimproved commercial land in southern California. The buyers were willing to pay $52,000 cash down and wanted the sellers to carry the $243,000 balance on a note secured by a first deed of trust with payments of $2,478.49 or more per month including 8.5% interest with the entire balance due and payable in ten years from close of escrow [...]

In my opinion, the problem is that there is no logic in our economy - nothing to hang any facts on. I feel this to be the main problem. [...]

This article was published with Michael Soon Lee’s permission. We appreciate his contribution to the S.E.C. Observer.
Over 60% of all homebuyers in America today are minorities according to the National Association of REALTORS®. There are over one million people from overseas coming into the United States every year and they all want to show friends [...]